Old scars of the 2008 crisis continue to be ignored

In 2007 the newly appointed Fed Chair, Ben Bernanke, declared that problems in the subprime mortgage market were so “limited” they would not create “significant spillovers." Within a year, those limited problems would snowball into a full-blown crisis and the financial community would see the collapse of more than four major financial institutions and the largest government bailout in U.S. history.

It was the combination of poor investment strategy and the overzealous mentality of the larger financial institutions that set us on the path to crisis.

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By the end of 2009, nearly 3 million American families were foreclosed and nearly one million Americans were evicted from their homes and out on the street. These hardworking people had been taken advantage of by the desire of some bad actors to drive profits at all costs as they convinced people they could afford a house they did not have the income to support. It was in the pursuit of financial gain that banks like Countrywide Financial took actions that decimated entire communities with their lending practices.

Having seen firsthand the destruction the 2008 crisis had on communities, in both my home state of Maryland and nationwide as I traveled the country, I believe it is our duty to remain vigilant to ensure this pain does not strike our communities again. Millions of Americans saw their life savings disappear in a snap, suffering hard consequences for the mistakes and greed that these banks refuse to acknowledge.

It enacts some key changes to the Dodd-Frank law passed in 2010 and lightens the banks’ regulatory burden, raising the threshold designating a bank as a systemically important financial institution from $50 billion to $250 billion in assets, thus making some banks not subject to many of the strict regulations passed in the Dodd-Frank act of 2010. With that as a backdrop to the upcoming hearings, Rep. Emanuel Cleaver (D-Mo.) said he wanted banking executives to tell him "why we bail them out and can't experience any meaningful support from them in times of trouble." Good question.

In truth, elements of the subprime mortgage crisis of 2008 still linger and the impact of such changes to Dodd-Frank are concerning; especially within minority communities. The dream of homeownership continues to be out of reach for millions of African-Americans as the homeownership rate within the black community remains at 42 percent, while Hispanics homeownership is at 46 percent.

The growing skepticism toward these large banks is more than justified, especially as many of them continue to make claims in public and in court that they are not responsible for what happened and refuse to acknowledge any wrongdoing.

Unfortunately, the American legal system has provided them the protections to do exactly that. If you can believe it, there is still pending litigation today that dates back nearly 8 years, including cases involving Bank of America, and up until recently, Lehman Brothers. As a lawyer, myself, I am aware of this strategy to drag these cases out for as long as possible.

So, while the government cannot dismiss efforts by banks to prolong such court cases, they can, and should, strongly encourage negotiations to bring an end to them. Moreover, without proper clarity on the allocation of the financial losses involved, investors and those that would respond to any upcoming economic downturn cannot have a clear picture as to the ongoing health of the largest institutions upon which all our economic fates are linked.

Today there remains cause for concern within the housing market in key areas such as deregulation of the financial sector, uncertainty about future Federal Reserve policy and the ever increasing revolving door between Wall Street and Washington, D.C.

Further, rising interest rates are slowly revealing a relaxation of lending standards as banks aim to maintain volume and profits. The combination of poor investment strategy and overzealousness is starting to rear its ugly head again much like we saw prior to 2008.

Directly or indirectly, public policy efforts to inflate profits for big banks by the Trump administration and some in Congress are setting us up for another crash — one in which a disproportionate number of low income and minority communities will bear the burden.

It’s time for Republicans and Democrats to take stock of our mistakes and seriously learn from them. Ten years after one of the largest financial crises in American history, there are still those who refuse to admit any wrongdoing, and it is up to Congress and financial regulators to change that. Otherwise, to continue to allow the deceptive tactics of the past to go unpunished could have potentially wider ramifications nationwide than just the subprime crisis. If these bad actors are rewarded instead of penalized, we are handing the keys to the global economy back to those unscrupulous actors.

Madam chairwoman, the keys are still in your hands for — now.

Michael Steele is the former Republican National Committee chairman and former lieutenant governor of Maryland. He is the CEO of The Steele Group.